FDI Inflows Soar in Vietnam

Oct. 29 – According to Vietnam’s General Statistics Office, foreign direct investment (FDI) inflows have reached US$19.2 billion this year, an astounding increase of 65.5 percent over the previous year’s foreign investments. Now in the final quarter of its fiscal year, the Vietnamese economy has surpassed the government’s target of US$13-14 billion in annual FDI contributions.

Among the 52 countries having participated in Vietnam’s FDI, investors from Korea have contributed the largest share, worth US$3.6 billion this year. Singapore is the next largest investor with US$2.7 billion in contributions. China, Japan and Russia have also participated heavily in Vietnamese FDI for a combined contribution of US$4.4 billion.

The pace of foreign-funded projects has also increased this year, with over 1,000 approvals for new ventures and a continued contribution of US$6.2 billion to ongoing projects. Manufacturing and processing proposals have received the greatest share of interest from foreign investors and represents 77 percent of contributed capital.

October saw the greatest inflow if FDI this year thanks to the approval of two large projects this month. The first is a 1,200MW thermal power plant worth US$2 billion sponsored by the China Southern Power Grid Company and China Power International Holdings, which will share a 95 percent ownership stake in the project. The second is a US$1.2 billion dollar integrated circuit project funded through FDI contributions from Samsung.

Vietnam’s government increased efforts this year to attract foreign investment after concerns over poor infrastructure development contributed to the country’s lower-than-expect ranking on the World Business Forum’s Global Competitiveness Report, which ranked the country 90th out of 142 countries.

During its FDI outreach campaign, Vietnamese officials focused on attracting capital from its regional neighbors, such as Japan.

“The Japanese and Vietnamese economies are meant to complement each other. Vietnam is not only a long-term investment destination for Japanese businesses but also a trusted friend and companion,” said President of the Vietnam-Japan Friendship Parliamentarians Caucus Huy Rua during the 2013 Vietnam-Japan Economic Summit held last month.

FDI inflows increased greatly following this campaign, with many of the major cities seeing an influx in Asian investment. For example, Ho Chi Minh City has seen their inflows increase by nearly 115 percent this year, led mostly by Japanese investments in the city’s export-processing zones and industrial parks.

The current trend of above-average FDI inflows is expected to continue through 2015, according to the National Financial Supervisory Committee (NFSC), which cited an improving global economy and increased bilateral participation as the Trans-Pacific Partnership Agreement comes into effect in 2015.

The NFSC further expects Vietnam’s economy to grow by 5.6-6.2 percent in 2014 and 2015.